Current Estimated 2016 Cap Space: $27.5 million
Expected 2016 Cap Space: $37.6 million
The other day Julio Jones signed a massive $71.25 million contract that will make him the 2nd highest paid receiver in the NFL. It is a very strong contract for Jones who will have $47 million guaranteed early in 2016, $2 million more than Dez Bryant’s recent extension. Normally when we value contracts that are extended we look at “new money” which is the additional money added to the existing value of the contract. That provides us the best way to compare pure free agent style contracts with those of players who have years remaining. But Jones’ contract situation was unique which led to a “win-win” negotiation where the two sides probably have somewhat different valuations on the contract. Continue reading A Closer Look at Julio Jones $71.25 Million Contract »
I came across a topic on the Atlanta Falcons message board discussing options for Falc0ns injured tackle Sam Baker and thought it would make for a decent topic about how to handle bad contracts.
The Baker contract was never a good one and also illustrates some of the shortcomings of the Falcons way of doing business in which they use multiple tiered prorated bonuses on big ticket players. When those players bust the fall is difficult. Though Baker does not have any guaranteed money left after this season, a standard release would cost the Falcons $1.9 million in cap room, with Baker’s cap number jumping from $7.3 to $9.2 million. That’s the danger of these deals as even though there is no guarantee there is limited benefit to release. It is what we call a virtual or effective guarantee. When such players are encountered teams have limited options if their salary cap situation is tight enough that they can not absorb large amounts of dead money.
The option most would consider is the June 1 cut. The June 1 cut allows a team to release a player at the start of the League Year, but have the release treated as if he was cut after June for cap purposes. In this scenario Baker’s cap charge from March through June 1 would be $7.3 million, the same as if he is on the roster, and then on June 2 it drops to $2.8 million. Atlanta would then carry a $6.4 million cap charge in 2016. They could also accomplish this by simply waiting until June to release him.
The problem with that scenario is that no salary cap benefit is realized until June. Though it may not be as popular an option, the better option is to approach Baker with a deep paycut that contains no guarantees. Baker’s options at finding a job in the NFL again would be limited so he would have little choice but to accept unless he was convinced that he would not pass a physical and thus qualify for injury protection under the CBAif released (that amount is $1.1 million) .
What the team would do is reduce Baker’s salary to something like $1 million and give him a chance to earn another $1 million in roster bonuses for games active and perhaps another $500,000+ for playing time. Because Baker did not play in 2014 the only number that would count towards the cap is the $1 million base, a savings of $3.5 million in immediate cap room.
The other benefit to this contract is because you guaranteed nothing you can still release him and have the same cap charges that you would with the June 1 cut, except here you get the benefit of immediate cap space and seeing if he can still benefit your team in any manner on the field. Here is how the scenarios would play out:
|Date||June 1 Cut||Reworked Contract||Reworked/August Release|
|June 2 Cap||$2,800,000||$3,800,000||$3,800,000|
|August 1 Cap||$2,800,000||$3,800,000||$2,800,000|
There is virtually no downside to the reworked contract. You may get something positive out of the player and if you don’t the most it will cost you is somewhere between $1 and $2 million in cap room (the figures depends on games he is active for). The 2016 season remains the same in any scenario and you gain immediate cap flexibility in 2015. So while it is early to be discussing next years roster moves, actual teams should already be looking ahead as many of their biggest moves for 2014 are already complete.
Week two of our Best & Worst series starts with the Atlanta Falcons
Despite an injury plagued 2013 season which saw Roddy White post very pedestrian numbers, there is no doubt that White has been a tremendous bargain for the Atlanta Falcons since signing a $42.72 million contract extension back in 2009. Since then White has produced four 1,000 yard seasons, three of which have been at least 1,296 yards. He has been instrumental in the development of QB Matt Ryan and never caused any contractual headaches despite being one of the most underpaid receivers in the NFL.
Whether the Falcons got lucky by extending White right before contracts began going over the top at the position or by being tough on the contract, they snagged White for pennies on the dollar. White had already proven that he was a high end caliber receiver with back to back seasons of at least 1,200 yards when he signed which should have been enough to grab a true game changing contract. By 2010 lesser players pushed the market beyond White and nowadays just having the potential to produce at this level would earn a player $12 million a year.
White would never carry a cap charge of more than $9.125 million in a season and overall the contract would be a solid structure for the Falcons. During his prime years between the ages of 28 and 31 White’s cap figures would range from $6.5 to $8 million. At the age of 33 White carries just a $6.325 million cap charge which would be a reasonable expectation for a player at that age. The team used a modest signing and option bonus which made him easy to release during either of the last two seasons of the contract if they needed. White’s deal also never contained the balloon payment structure that forces renegotiations and/or extensions
While there has been talk of extending White, the Falcons maintain leverage with the contract which should allow them to offer a modest priced contract that reflects his age. As things stand White will play out his entire contract, which is a rarity in the NFL. That often is the sign of a very strong contract from the start. White has earned every penny of the contract while remaining one of the best bargains of recent times.
Part of me believes the Falcons’ front office has begun to move towards the thought process of playing solely for the present and paying less regard to negative future scenarios. That often happens to teams that are successful and trying to keep things running smoothly as they prepare to take the next step towards a championship. The Houston Texans followed a similar path with some extensions with little regard for the future and a focus solely on the present. The Texans fell apart and Atlanta will hope they don’t follow suit when they try to rebound from an injury filled 2013. While the team has few, if any, outlandish contracts the structures that they are using requires the players to maintain a strong level of play over a few year period to justify the charges.
Like I said last season, I don’t think Sam Baker is a bad player, the contract is just a bit of a reach on a player that should never have been considered a core player. The Falcons followed their typical procedure with the signing and option bonus payment, but in Baker’s case that 6th contract year is all about early contract salary cap reduction rather than true contract flexibility. It’s more of less no different than a voidable year. The $14 million in bonus payments also makes a very player friendly contract structure.
I think the comparison in Baker’s case was Will Beatty of the Giants. Both were decent players at important positions who tried to inch as close as possible to top mid-tier money. Baker will earn less overall than Beatty but has a better contract structure with nearly 66% of his five year value being paid in the first three years compared to Beatty’s 64%. Neither player gave the team injury protections, which arguably should have come in both contracts.
The bigger difference comes in the use of bonus money. Beatty received $12 million prorated over five years giving the Giants the ability to release him with $5 million remaining in acceleration come 2016, which represents around $4 million in cap savings. Baker will carry $6.4 million at the same time and only save the team about $1.6 million. That number I believe does a good job at protecting Baker’s four year contract value of $28 million while Beatty could be gone after three years and $24 million.
The contract looks worse now because Baker missed 12 games in 2013 and it reminded people of some injuries he has suffered throughout his career. It’s not that bad of a contract but its one in which the team could have gotten better protection and/or more cap flexibility. If Baker struggles in 2014 this is a contract that will likely be a focus of discussions concerning the Falcons moving forward especially since the Falcons spent a high draft pick on an offensive lineman, perhaps conceding the mistake that was made with Baker.
2013’s Best and Worst Falcons Contracts:
2013 Best Contract: Roddy White (In final year of contract- see above)
2013 Worst Contract: Sam Baker (Starting tackle Signed extension with Raiders-See above)
Matt Ryan #2 QB, Atlanta Falcons
On July 9th, Matthew Stafford signed a 5 year $76.5 million contract with the Detroit Lions. That signing along with the rumors leading up to the signing put Matt Ryan back on the mind. After watching the Baltimore Ravens gamble and lose with Joe Flacco, the question on most fans minds is how soon Matt Ryan’s contract will be extended by the Falcons. Ryan is in the final year of his rookie contract (6 year $67.5 million) and is in position to really break the bank on his next contract.
We must remember where the Falcon franchise was in 2008 when they drafted Ryan 3rd overall. The Mike Vick disaster had the club searching for a new face that it could be proud. Matt Ryan was the man that not only pulled the Falcons out of the depths of public outcry, but it can be argued that the Falcons are now completely distanced from the incident because of Ryan. How can something as unprecedented as this be valued? It really is up to the Falcon brass to weigh in, but my assumption is that the Falcons will not go into the season without extending Ryan.
Oddly enough, it is the contract that Vick signed with the Eagles in 2011 that most closely resembles Ryan’s present value. Add that skill valuation with the goodwill he has created in Atlanta, and it is a recipe for a Top 5 QB contract.
Estimated New Contract: 5 years, $86 million
A few weeks ago Jason LaCanfora published a list of best and worst contracts in the NFL so I thought it might make a good idea for us to do the same here at OTC, with a team by team approach. I’ll try to be a bit more analytical in terms of why money was paid and how it fits in the market, but the general premise is the same. The one key difference is outside of restructured rookie contracts under the old CBA we will only use veteran contracts as there is a big difference between best draft picks and best contracts. Please note that there is a difference between a bad player and a bad contract when discussing some of the selections. Clicking on a players name will take you to his salary cap page.
Best Contract: Roddy White
Wide Receiver has become one of the premier pay spots in the NFL. The position has escaped the market correction that seems to have impacted Defensive Ends, Left Tackles, and Cornerbacks and the top of the market makes around $12 million a year in free agency often based just on hope for “what they can do” without those players actually doing it. There is no need to hope for White. White is simply the real deal.
You will not find many players in the NFL as consistent as White. You can pretty much pencil him in for 100 receptions and 1300 yards every season. You can probably make an argument that he is one of the five most consistent and productive players at the position in the NFL. He fits perfectly in the Falcons offense and was helpful in the early stages of development of QB Matt Ryan. There is little to not like about White outside of the fact that he will be 32 this season which could mean bouts of declining productivity.
At just over $8.5 million a season, White is a steal in this overinflated WR marketplace. One of the best in the NFL, his salary ranks middle of the pack among starters. Part of the reason is because his deal was signed in 2009 before salaries exploded, but he earns less than Miles Austin and far less than Brandon Marshall, two players signed just one year later. Marshall, at $11.2 million a season represents what White should be earning.
The Falcons also should be given credit for the structure of his deal. Players such as Steve Smith and Andre Johnson had contracts that would see more balloon type payments as the players got older leaving a team with a very difficult decision. The Falcons wisely kept White’s cap hits steady and marked the 2013 season as a possible jettison point, a logical year based on age. White’s cap this year is over $9 million and with $3.85 million in dead money an easy negotiating point to force a player into a “paycut or be cut” scenario. Of course with how White played that never became an issue but it was clearly planned for.
White will only count for $6.325 million against the 2014 salary cap assuming no incentives or escalators are reached. The dead money in 2014 is just $1.325 million giving the Falcons as many options as they want with him. They can offer a Reggie Wayne type “ride off into the sunset” contract where he finishes his career in Atlanta at continued reasonable cap charges or just let him play it out at just over a $6 million dollar cap charge. There is little more than you could ever expect out of a player than what White has given the Falcons over the course of his contract.
Worst Contract: Sam Baker
I went back and forth on a few names here. The Falcons don’t really have anything that screams at you as bad. They are more like a handful of some mid tier contracts that you say maybe could be better than they were. Part of me wanted to go with William Moore who I think is paid more because of fear of losing him and the unknown than what he actually brings to the field relative to the position, but its still a contract that they can escape from after two seasons if they wanted to. The same can not be said for Baker.
Baker isn’t a bad player and played pretty well last season, but I don’t think many people equate Baker with being a core building block that can not be replaced. The Falcons more or less have given him a contract structure that won’t allow them to replace him. To get the deal done Atlanta had to use both the signing bonus and option bonus mechanism, prorating money over 6 years and making the backend dead money more difficult to deal with.
I think a fair comparison here is Will Beatty of the Giants who is actually going to be paid more on an annual but has a friendlier contract structure. Beatty will see 64% of his contract paid out in the first three seasons. Baker will earn 65.9% of his five year total in the first three seasons. Maybe that was a tradeoff for a 6th year, but that 6th year was mainly only added for cap purposes. So it’s the same or more than the higher priced player.
Despite the higher payout Beatty’s dead money consistently runs lower than Bakers. Beatty will carry a $5 million dead hit if cut in the 4th year of his contract. Baker will carry $6.4 million. The following season Beatty is at $2.5 while Baker is at $3.6. Those are the kind of numbers that gives teams some leverage to renegotiate contracts if the player doesn’t perform. Baker is pretty much safe for 4 seasons. So while I would not consider this a really bad contract by any stretch, if there is a spot to go where the Falcons may have overreached a little I’d give that nod to Baker’s contract.
Check out Our Other Best & Worst Contract Articles
NFC South: Atlanta Falcons, Carolina Panthers (July 24)
According to Adam Schefer:
Major moves in ATL: Falcons are releasing CB Dunta Robinson, RB Michael Turner and DE John Abraham today.
— Adam Schefter (@AdamSchefter) March 1, 2013
The Turner move had long been expected so there is no surprise there. I had speculated about the release of Dunta Robinson on the PFF radio show the other day. Robinson never lived up to expectations and was set to count for $9 million against the 2013 salary cap. $3 million of his salary would become fully guaranteed if on the roster on March 17th. Abraham was a bit of a surprise. He is still a productive pass rusher and had 10 sacks last season. We had his cap number at $7.25 million which is pretty cheap for a player that can get after the passer.
Releasing Turner saves the team $6.9 million in cap room, Robinson’s release saves the team $6 million and the Abraham cut takes $5.75 million off the books. That totals $18.65 million in savings. They will be replaced by 3 minimum salary players making the net cap gain $17.435 million that can now be spent in free agency.
My gut feeling is that there will be a great deal of Darrelle Revis and Dwight Freeney speculation now that these moves have been made. Atlanta knows they are a close team and could look for two impact players like that as the missing piece to the puzzle. I will update the Atlanta Falcons salary cap pages within the hour to reflect the releases.